Cliffs Natural Resources Inc. v. Seneca Coal Resources, LLC

This
matter is before the Court on Defendant Seneca Coal
Resources, LLC.'s Motion to Transfer Venue Under 28
U.S.C. § 1404(a). (ECF # 42). For the following reasons,
the Court grants Defendant's Motion and transfers the
case to the United States District Court for the District of
Delaware for further adjudication.

This
matter arises out of a purchase agreement between Plaintiff
Cliffs Natural Resources, Inc. (“Cliffs”) and
Defendant Seneca Coal Resources, LLC (“Seneca”)
that was entered into in 2015, involving the sale of certain
mining assets owned by Cliffs to Seneca. According to
Cliffs' Complaint, Cliffs is an Ohio-based mining and
natural resources company that is a major supplier of iron
ore pellets to the North American steel industry. Seneca is a
Virginia-based company. On December 22, 2015, Cliffs, CLF
PinnOak LLC and Seneca entered into a Unit Purchase Agreement
(“UPA”) wherein Cliffs sold outstanding equity
interests in Cliff North American Coal LLC to Seneca. Under
the UPA, Seneca agreed to replace bonds and guarantees and
agreed to reimburse Cliffs for certain expenses. Seneca
agreed to replace certain bonds and cause the release of
Cliffs' bonds within 45 days of the Closing date.

Because
of the sale of the equity interests in Cliffs North American
Coal, Seneca was responsible for assuming all liabilities,
including the purchase of workers compensation insurance and
administering the same. Under the UPA, Seneca agreed to
indemnify Cliffs for any losses arising out of or resulting
from the breach of the UPA, the bonds or guarantees.

Seneca
failed to replace the bonds within 45 days as required by the
UPA and failed to cause the timely release of the guarantees
and letters of credit, causing Cliffs to incur losses. Cliffs
also incurred additional losses related to capital lease
repayments, workers compensation costs, bond premiums and
medical costs all of which Seneca was contractually obligated
to pay. Seneca has failed to assume administration of workers
compensation as required under the UPA. Cliffs now moves for
Breach of Contract for Seneca's failure to pay under the
UPA over $6, 000, 000. Cliffs further moves for a declaratory
judgment that Seneca may not transfer assets to its Defendant
owners or affiliates until it pays its obligations to Cliffs
under the UPA.

Seneca
has counterclaimed for Breach of the UPA for Cliffs'
failure to disclose obligations due and owing at the time of
the sale. Seneca also alleges a claim for Breach of Contract
for failing to make Union payments and Breach of Contract for
failing to pay certain contractual obligations at closing.

On
February 1, 2017, Cliffs filed its First Amended Complaint
adding additional parties Cliffs alleges conspired to
transfer assets from Seneca to the newly named affiliates of
Seneca.

On
March 30, 2017, Defendant Seneca Coal Resources, LLC. moved
to transfer the case to Delaware based on a forum selection
clause in the UPA. Section 9.10 of the UPA reads in pertinent
part:

This Agreement shall be governed by and construed in
accordance with the Laws of the State of New York applicable
to Contracts to be made and performed entirely therein
without giving effect to the principles of conflict of law
thereof or of any other jurisdiction. Each of the parties
hereto hereby (a) expressly and irrevocably submits to the
exclusive personal jurisdiction of the United States District
Court for the District of Delaware and to the jurisdiction of
any other competent court of the State of Delaware located in
New Castle County (collectively, the “Delaware
Courts”), preserving, however, all rights of removal to
such federal court under 28 U.S.C. 1441 in connection with
all disputes arising out of or in connection with this
Agreement or the transactions contemplated hereby and (b)
agrees not to commence any litigation relating thereto except
in such courts. * * * Each party hereto hereby waives the
right to any other jurisdiction or venue for any litigation
arising out of or in connection with this Agreement or the
transactions contemplated hereby to which any of them may be
entitled by reason of its present or future domicile.

Due to
the mandatory language of the forum selection clause and
pursuant to the United States Supreme Court's relatively
recent ruling on the enforceability of forum selection
clauses, Defendant contends the case must be transferred to
Delaware.

Cliffs
argues Seneca expressly agreed that this Court has
jurisdiction over Cliffs' claims in Seneca's Motion
to Dismiss for Lack of Jurisdiction. In its Motion at pgs
13-14, Seneca represented “Defendant Seneca recognizes
that there exists a justiciable case or controversy with
Plaintiff to vest this court with subject matter jurisdiction
with respect to Plaintiff's post- transaction breach of
contract claims. The BB&T settlement agreement contains a
specific retention of jurisdiction by the Court.”
Cliffs contends this statement, Seneca's waiting
approximately three months after Plaintiff filed its
Complaint to raise a venue challenge and Seneca's filing
of a Motion to Dismiss and Answer constitute a waiver of its
venue challenge. Furthermore, Cliffs contends Seneca
expressly consented to this Court's jurisdiction in a
2016 settlement of a related case wherein the parties agreed
the Court retained jurisdiction to enforce the terms of the
settlement or otherwise. Also, Cliffs argues Defendant
improperly moved for transfer of venue under 28 U.S.C. §
1404(a) when they should have moved under 28 U.S.C. §
1406. Lastly, Cliffs argues it did not consent to venue in
Delaware as no party is a resident of Delaware and non-of the
actions at issue occurred in Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;First,
Defendant is correct that 28 U.S.C. &sect; 1404(a) is the
proper mechanism for enforcing a forum-selection clause. See
Atlantic Marine Const. Co. v. U.S. Dist. Court for W.
Dist. of Texas,134 S.Ct. 568, 574, 187 L.Ed.2d 487
(2013) (“ the clause may be enforced through a motion
to transfer under § 1404(a), which permits transfer to
any other district where ...

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